Question 1

What causes the Tragedy of the Commons? i)  Social and private incentives differ.
Ii)  Common resources are not rival in consumption and are not excludable.
Iii)  Common resources are not excludable but are rival in consumption.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and ii)  only
D)   i)  and iii)  onlyE) B) and C)
F) A) and B)

Question 2

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.
 
-Refer to Table 11-2. Suppose the cost to install each streetlight is $600 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Brown's like the town to install?

Accepted Answer

A)   0 streetlights
B)   1 streetlight
C)   2 streetlights
D)   3 streetlightsE) A) and B)
F) B) and C)

Question 3

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

Accepted Answer

A)   the local government should build the garden, but you should not.
B)   you should still build the garden, but the local government should not.
C)   neither you nor the local government should build the garden.
D)   either you or the local government should build the garden.E) A) and C)
F) B) and D)

Question 4

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

Accepted Answer

A)   society finds them so valuable that citizens are happy to pay for their full cost.
B)   these goods create a free-rider problem.
C)   if they were funded privately, too many of these goods would be produced.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 5

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

Accepted Answer

A)   increase entrance fees.
B)   decrease camping permit fees.
C)   require all visitors to register upon entering the park.
D)   sell the land that the parks currently occupy.E) A) and C)
F) A) and B)

Question 6

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Accepted Answer

A) True 
 B)False

Question 7

What particular characteristic do private goods and club goods have in common?

Accepted Answer

Private go...

Question 8

Figure 11-1

-Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) C) and D)
F) A) and B)

Question 9

The national defense of the United States is not rival because

Accepted Answer

A)   my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States.
B)   my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States.
C)   once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense.
D)   once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense.E) A) and B)
F) A) and C)

Question 10

Table 11-3
This table describes the police protection demands for three equal sized groups of people in Safetyville. The second, third, and fourth columns show the number of person-hours of police protection per day that a group will demand for a given price the first column) .
 
-Refer to Table 11-3. If the marginal cost of police protection is constant at $72 per person-hour, what is the efficient level of police protection to provide?

Accepted Answer

A)   9 person-hours
B)   18 person-hours
C)   39 person-hours
D)   66 person-hoursE) B) and C)
F) A) and B)

Question 11

Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time- share condominium in Alta, Utah. Suppose that the lift lines at the ski resort become more congested when the ten additional people start to ski. Which of the following statements is not correct?

Accepted Answer

A)   Use of the ski resort by the ten new skiers will yield a negative externality.
B)   The ski resort can reduce the congestion externality by raising lift ticket prices.
C)   An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion.
D)   Each of the ten friends would have been better off staying at home.E) C) and D)
F) B) and C)

Question 12

Some goods can be either common resources or public goods depending on

Accepted Answer

A)   whether the good is rival in consumption.
B)   whether the good is excludable.
C)   the marginal cost of the good.
D)   None of the above is correct.E) A) and D)
F) C) and D)

Question 13

A textbook is a

Accepted Answer

A)   private good and the knowledge that one gains from reading the book is a common resource.
B)   private good and the knowledge that one gains from reading the book is a public good.
C)   common resource and the knowledge that one gains from reading the book is a public good.
D)   common resource and the knowledge that one gains from reading the book is a private good.E) A) and D)
F) B) and C)

Question 14

Goods that are not rival in consumption include both

Accepted Answer

A)   private goods and common resources.
B)   club goods and public goods.
C)   common resources and public goods.
D)   private goods and club goods.E) A) and B)
F) All of the above

Question 15

Are common resources excludable? Are they rival in consumption?

Accepted Answer

No, common resources...

Question 16

A city street is

Accepted Answer

A)   always a public good, whether or not it is congested.
B)   a public good when it is congested, but it is a common resource when it is not congested.
C)   a common resource when it is congested, but it is a public good when it is not congested.
D)   always a common resource, whether or not it is congested.E) None of the above
F) B) and C)

Question 17

The degradation of the environment from litter is a

Accepted Answer

A)   a negative externality.
B)   free rider problem.
C)   Tragedy of the Commons.
D)   Both a and c are correct.E) C) and D)
F) All of the above

Question 18

Which two types of goods are rival in consumption?

Accepted Answer

Private goods and co...

Question 19

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Accepted Answer

No one owns the wild salmon, while priva...

Question 20

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Accepted Answer

A)   install the light because the expected benefit of $400,000 is greater than the cost.
B)   install the light because the expected benefit of $45,000 is greater than the cost.
C)   not install the light because the expected benefit of $45,000 is only equal to the cost.
D)   not install the light because the expected benefit of $40,000 is less than the cost.E) B) and C)
F) B) and D)

Exam 11: Public Goods and Common Resources

The national defense of the United States is not rival because

Correct Answer
verified

What causes the Tragedy of the Commons? i) Social and private incentives differ. Ii) Common resources are not rival in consumption and are not excludable. Iii) Common resources are not excludable but are rival in consumption.

Correct Answer
verified

Correct Answer
verified

What particular characteristic do private goods and club goods have in common?

Correct Answer
verified
Private go...
View Answer

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

Correct Answer
verified

Are common resources excludable? Are they rival in consumption?

Correct Answer
verified
No, common resources...
View Answer

Correct Answer
verified

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Correct Answer
verified
No one owns the wild salmon, while priva...
View Answer

The degradation of the environment from litter is a

Correct Answer
verified

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

Correct Answer
verified

Correct Answer
verified

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct Answer
verified

Which two types of goods are rival in consumption?

Correct Answer
verified
Private goods and co...
View Answer

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

Correct Answer
verified

A city street is

Correct Answer
verified

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct Answer
verified

Goods that are not rival in consumption include both

Correct Answer
verified

Some goods can be either common resources or public goods depending on

Correct Answer
verified

Figure 11-1 -Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

Correct Answer
verified

A textbook is a

Correct Answer
verified

Exam 11: Public Goods and Common Resources

The national defense of the United States is not rival because

Correct AnswerverifiedShow Answer

What causes the Tragedy of the Commons? i) Social and private incentives differ. Ii) Common resources are not rival in consumption and are not excludable. Iii) Common resources are not excludable but are rival in consumption.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What particular characteristic do private goods and club goods have in common?

Correct AnswerverifiedPrivate go...View AnswerShow Answer

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

Correct AnswerverifiedShow Answer

Are common resources excludable? Are they rival in consumption?

Correct AnswerverifiedNo, common resources...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Correct AnswerverifiedNo one owns the wild salmon, while priva...View AnswerShow Answer

The degradation of the environment from litter is a

Correct AnswerverifiedShow Answer

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct AnswerverifiedShow Answer

Which two types of goods are rival in consumption?

Correct AnswerverifiedPrivate goods and co...View AnswerShow Answer

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

Correct AnswerverifiedShow Answer

A city street is

Correct AnswerverifiedShow Answer

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct AnswerverifiedShow Answer

Goods that are not rival in consumption include both

Correct AnswerverifiedShow Answer

Some goods can be either common resources or public goods depending on

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

Correct AnswerverifiedShow Answer

A textbook is a

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Private go...
View Answer

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No, common resources...
View Answer

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Correct Answer
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No one owns the wild salmon, while priva...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Private goods and co...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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